How to Close More Escrows with Alternative Hard Money Lending

Home ownership is a dream for many people, but for countless people, a typical Fannie Mae loan simply won’t work.

In a perfect world, every buyer would be a cash buyer and no escrow would ever be canceled because of lack of funding.

And while most buyers can obtain a standard Fannie Mae loan, those that aren’t may feel like their chances of owning a home are slim to none.

For many reasons, the loan process can stall, which has a ripple effect for buyers and sellers alike.  If people can’t sell their home, they can’t get the funding they need to buy a new home. The real estate agent doesn’t get a commission, and in short, everyone loses.

Alternative Hard Money Lending May Be The Right Answer

There are many reasons why the loan process doesn’t work for certain buyers.  It could be that they’re just outside the lending requirements of most banks or financial institutions.  They may have additional income challenges or credit issues.

Sometimes the issue has nothing to do with the buyer at all. Maybe they want to “fix and flip” a home that is in need of significant repair.  Banks won’t loan on a home that’s in considerable disrepair.

The best part is, if the buyer has 20-25% for a down payment, the other requirements, such as the income and credit requirements that banks and lending institutions put into place, are eliminated.

Alternative hard money lending doesn’t have the kinds of income and credit requirements that buyers need to meet in order to obtain the loan.  And in some cases, real estate agents who are open to alternative lending can close even more escrows.

Here are a few situations where alternative lending can help:

Lower FICO scores due to bankruptcy or foreclosure

With alternative hard money lending, buyers can get their loan approved right after a bankruptcy. If there was a foreclosure, there’s no need to wait several years in order to get the financing they need.

And with alternative hard money lending, a short sale isn’t considered a foreclosure – so everyone wins.

Income issues from tax returns

Banks typically judge a buyer’s income from their tax returns – but tax returns don’t tell the whole story.

With alternative hard money lending, all that’s needed is 12-24 months’ worth of bank statements, which are easy to get.  And in some situations even stated income can be all that’s needed.

FNMA/FHLMC Condominium Approval

One issue that’s specific to buyers who are looking to purchase condominiums is that their approval is contingent upon the condominium being Fannie Mae or Freddy Mac Approved.  Alternative hard money lending has no such stipulations.

Less documentation needed

Alternative hard money lending also requires less documentation in how the down payment is sourced. This can be ideal for buyers looking to fix and flip properties or who are looking to buy a fixer upper and repair it on their own.

If your buyer is having trouble getting their loan approved, contact us for more information about how alternative hard money lending could be the solution they need.